Chapter

China's Role in Conflict Mediation Project

Venezuela, the State That Refuses to Collapse

What is China's Role?

China has limited its involvement in crises in Venezuela, preferring to secure its economic interests and avoid reputational cost

By Benjamin Creutzfeldt • Parsifal D’Sola Alvarado

China

February 16, 2024

In this chapter of China and Conflict Mediation, Benjamin Creutzfeldt and Parsifal D’Sola Alvarado assess the history of China’s engagement with Venezuela amid a period of rapid political and economic transformation for the South American petrostate. The authors examine how China worked to protect its investment interests in Venezuela while eschewing direct involvement in the political crisis, an approach calibrated for the Western Hemisphere that distinguishes it from China’s mediation activities in other regions.

China and Conflict Mediation Series

The China and Conflict Mediation series collects eight papers by senior experts on China’s evolving approach to conflict mediation around the world. Presenting case studies from four continents, each chapter examines the drivers, frameworks, and outcomes of China’s efforts to engage in conflict mediation. With analysis drawn from the historic context and current events that influence China’s decision to attempt mediation, this series provides insights into why China is increasingly active in this area, and what it means for China’s role in the international community.

Introduction

The Bolivarian Republic of Venezuela has devolved from an ambitious experiment in social change and foreign policy realignment in the first decade of the 21st century, led by the charismatic Hugo Chávez, to a poorly managed petrostate suffering mass emigration and an inability to produce or export its principal commodity, oil. Over a period of almost twenty years, the People’s Republic of China became a key partner to the Venezuelan economy through loans advanced on future oil production, while its state-owned corporations and development banks, along with thousands of workers and private entrepreneurs in supply and service industries, took on varying degrees of risk to operate in the South American country. As global oil prices dropped precipitously in 2014 and the country’s crude oil industry collapsed as a result of widespread malfeasance, domestic corruption soared, and the economic and security situation across society worsened, forcing large numbers of Venezuelan citizens to emigrate.¹ This was further compounded by progressive sanctions by the United States against the administration of Nicolás Maduro. Meanwhile, China faced considerable short-term losses to its assets and threats to the safety of its nationals resident in the country, as well as reputational costs in the region stemming from its prominent involvement in a country in economic freefall.

Throughout the 2010s, the Chinese government found itself in the position of having to scramble to secure its interests and bilateral commitments on two occasions: first in 2015, when it perceived its standing in the country to be less secure with the Venezuelan opposition gaining control of the National Assembly, the country’s legislature, and again in 2019 with the de jure installment of an interim government, directly challenging the Maduro presidency. Back in 2019, several commentators and academic authors underscored the need and outlined possible scenarios for Chinese intervention in Venezuela’s multilayered crisis,² and though there is scant evidence of direct interventions from Beijing, Chinese diplomats and business leaders alike repeatedly expressed exasperation and concern over the country’s downturn, and made declarations of a willingness to help resolve the political impasse.

Beyond North Korea and the Israeli/Palestinian conflict, the PRC’s efforts at mediation have been concentrated in Africa, the Middle East, and Southeast Asia. There is no precedent for the Chinese government stepping in to address or help resolve tensions between conflicting parties in the Americas. This chapter explores China’s response to the Venezuelan crisis and the degree to which there may have been any attempts at mediation or intervention. The first section traces the respective trajectories and geopolitical goals of the two countries against the backdrop of a growing intertwinement of the global economy, laying out the convergence of interests between the two nations, despite considerable differences. The subsequent section looks into the two key moments of electoral challenges to the status quo in Venezuela, in 2015 and 2019, including the increasingly proactive stance of the United States, and how China responded. The concluding section draws out the actions identified and offers a characterization of Beijing’s position and actions in Venezuela’s political dilemma.

Globalizing Trajectories

Global integration in the early 21st century saw China increasingly enmeshed in international supply chains and emboldened it to extend its reach across the globe. Similarly, South American economies saw shifts in the political and economic spheres that set the stage for greater global integration and growing opportunities for cooperation with China. A key factor in this realignment and deepening of relations was the partnership forged between Caracas and Beijing in the early 2000s.

Venezuela

The close relationship that developed between Venezuela and China during the 2000s was all but preordained. From a Venezuelan point of view, it was fundamentally an innovation driven by Hugo Chávez, elected president in 1999. In the first years of the Chávez presidency, Venezuela made a U-turn in its international relations, transforming from a country that broadly aligned with the United States and was an active promoter of democratic norms in the Western Hemisphere into a nation that grew ever more authoritarian at home and actively sought closer ties with autocratic countries like Cuba, Libya, Russia, and China, in an openly antagonistic stance toward U.S. policies in the region.³

During his time in office, Chávez visited Beijing six times, more than any other head of state in Latin America.⁴ In 2010 alone, the year that the two countries redoubled their mutual commitments and expanded the Sino-Venezuelan joint fund by US$20 billion, five high-level delegations from four different Venezuelan ministries visited Beijing.⁵ No other country in the Western Hemisphere, not even the region’s largest economy, Brazil, enjoyed this level of access in the Chinese capital.

The overhaul of Venezuela’s foreign policy strategies, including opening up to China, was underpinned by the country’s oil largesse.⁶ Chávez presided over the most profitable decade in Venezuela’s oil-producing history, due to a sustained surge in global crude oil prices⁷ that allowed his administration to implement an ambitious agenda at home and abroad, with virtually no budget constraints. This was further facilitated by the concentration of power in the executive branch of government. Record revenues notwithstanding, over the course of Chávez’s tenure, Venezuela’s public and foreign debt skyrocketed to historic levels—US$104 billion by 2013.⁸ Between 2007 and 2016, China lent Venezuela $62.5 billion, almost half of what it lent the entire region for the period, setting Venezuela as the single largest recipient of Chinese finance in the world.⁹

Under Chávez, Venezuela’s foreign policy was highly effective at projecting its influence along Latin America, a factor that is often overlooked when explaining China’s interest in Venezuela. Beginning around 2004, when oil prices started to rise, Chávez went on an international spending spree, offering multimillion-dollar investments, foreign aid, and subsidies to as many nations as possible.¹⁰ Between 1999 and 2007, estimates put Venezuela’s foreign commitments at around US$47 billion, out of which $17 billion can be billed as developmental aid. In what was labeled by one observer as “social power diplomacy,”¹¹ Chávez harnessed social policy and used it as the country’s primary foreign policy tool, allowing his political ideology, Chavismo, to transcend national boundaries, and captivating foreign audiences and political leaders across the Americas and beyond.¹²

An ideological hallmark was to create regional organizations aimed at reducing the influence of the United States and offering a counterweight to U.S.-led entities such as the Organization of American States. The Bolivarian Alliance for the Peoples of Our America, jointly founded by Cuba and Venezuela in 2004, and the Union of South American Nations are two key examples. Likewise, the Community of Latin American and Caribbean States (CELAC, Comunidad de Estados Latinoamericanos y Caribeños), another initiative spearheaded by Venezuela comprising the Organization of American States minus Canada and the United States, became a favored platform for Beijing’s regional engagement with the creation of the China-CELAC Forum in 2014.¹³

Venezuela’s foreign policy drive had the potential to integrate a considerable part of the region under an economic and political umbrella that excluded the United States. Given the palpable effects it was having in Latin America, it is easy to imagine how Chávez’s international overtures could have been perceived in Beijing as a window of opportunity to expand China’s influence in the region. When one compares how China behaved in Venezuela under Chávez with its behavior in the rest of the region, taking into account the stream of bilateral high-level visits and the multibillion-dollar loans, the notion that Beijing’s interest in Venezuela merely stemmed from accessing the country’s oil reserves seems insufficient. Overall, it is only when Venezuela’s regional leadership and international projection are framed around China’s own interests of expanding its economic and political reach in Latin America that the exceptional ties that evolved between Caracas and Beijing begin to make sense.

China

The ascent of Hugo Chávez in Venezuela coincided with China’s growing integration into global production chains and trade links, central to which was its joining the World Trade Organization in 2001. Earlier that year, then-president Jiang Zemin toured Latin America, where he encountered captive audiences keen to respond to Beijing’s overtures. As China sought to diversify its energy sources and expand its global influence, Venezuela stood out as a natural counterpart on both counts, and one that was particularly interested in monetizing its oil reserves into the future, and affiliating itself with a competitor of the U.S.¹⁴ Coincidentally, while global oil prices rose to an unprecedented peak in 2008 as a result of rising demand confronting stagnant global production, China’s concerns for its own energy security drove its state-owned enterprises to become actively involved in the extraction of oil (as well as minerals, in other countries of Latin America). The bulk of this outward push for energy security was underwritten by China’s two main policy banks: China Development Bank and the Export-Import Bank of China.

Chinese scholars coincide in the view that an accompanying interest was to gain firsthand experience in the Latin American environment, while geostrategic or political interests were not principal drivers of this budding relationship.¹⁵ Quite to the contrary, it is evident from numerous public events that Chinese political and business leaders were keen to avoid language referring to socialism, anticapitalism, or revolution, let alone to Chairman Mao.¹⁶

In November 2007, the China-Venezuela Joint Financing Fund agreement document was officially signed, jointly investing US$6 billion.¹⁷ In the following years, the funds were rolled over, so that the size of the fund was maintained at $5 billion. In August 2010, China Development Bank and Venezuela signed the China-Venezuela Long-Term Financing Cooperation Framework Agreement with a contract value of US$10 billion, or RMB¥ 70 billion, and a loan term of 10 years. Venezuelan oil companies used oil exports to China as the main source of funds to repay the loan, and continued to increase oil exports to China. The export volume increased from 100,000 barrels per day in 2007 over the following years to 500,000 barrels per day by 2017, with an unknown portion of the revenue from oil exports to China being used to repay Chinese loans.

Over the same period, economic and trade relations between the two countries developed rapidly, and a large number of Chinese enterprises entered the Venezuelan market under the overarching framework of the Sino-Venezuelan joint funds. The Joint Fund and the Bilateral Long-Term Financing Cooperation Framework supported China Railway Corporation Ltd., CAMCE Engineering Company, CITIC Construction, China Hydropower, and other large Chinese-funded enterprises, involving them in dozens of projects in Venezuela underpinned by over 500 bilateral agreements.¹⁸ The investments were concentrated in the energy and transportation sectors, as well as manufacturing, agriculture, housing construction, and infrastructure development. The largest single project had a finance volume of US$7.5 billion, disbursed through the joint framework agreement.¹⁹ Conversely, it is worth pointing out that most investments came from the joint funds, not from Chinese outward foreign direct investment. In fact, China’s outward foreign direct investment in Venezuela was quite limited, reaching only US$3 billion between 2004 and 2019.²⁰

From a geopolitical perspective, despite the overlaps of commercial interests and the sizable loans, there is ample evidence that the Chinese leadership under Hu Jintao and Wen Jiabao (2003-2012) was wary of being seen as planting a flag in Washington’s zone of influence. Even though they perceived potential benefits in their support of the Venezuelan economy at a time of a national transformation and in Chávez’s desire to become a prominent regional player, official declarations stopped short of supporting the Venezuelan leader’s enthusiastic endorsement of China’s “socialist path,” and remained muted on Chávez’s diatribes against U.S. “imperialism.” Successive editions of the Chinese Ministry of Commerce’s annual Overseas Foreign Investment Cooperation Country Guide for Venezuela highlight both the investment opportunities and the political and security risks for Chinese investors. Bilateral high-level meetings are testimony to a cordial and lively relationship, with both sides emphasizing their common goals of “stepping up substantive cooperation and seeking common development and prosperity,”²¹ and yet Chinese representatives assiduously avoided or downplayed ideological undertones, signaling that while Venezuela represented an opportunity to make significant inroads in South America, it was not going to jeopardize the far more important relationship with the United States. The Chinese leadership is keenly aware that many strategic misunderstandings prevail in the United States, where China’s development of energy cooperation with “problem countries” such as Myanmar, Venezuela, and Sudan is understood to be “irresponsible” or “supporting anti-U.S. behavior.”²²

After the death of Chávez in 2013 and Venezuela’s descent into crisis and social chaos, China came to the realization that few if any of the promised benefits of the relationship had materialized.²³ Rather, as Matt Ferchen has pointed out, “China’s economic and geostrategic interests in Venezuela, and potentially its reputation among Venezuela’s neighbors, have all been threatened.”²⁴ State-owned enterprises drew down their in-country staff to a tenth of previous levels, and had a difficult time explaining gaping losses with little to show for expenditures.²⁵ Analysts such as Stephen Kaplan have interpreted China’s patient approach to Venezuela’s downward spiral as evidence of Beijing’s “patient capital” in setting long-term goals ahead of short-term risks.²⁶ He also recognizes, however, that contrary to the notion of “debt trap” diplomacy touted by North American leaders, China is in fact ensnarled by a “creditor trap” in Venezuela.²⁷ Other experts have seen it as a sign of growing awareness of political risk among Chinese strategists.²⁸

China Faces Challenges in Venezuela

Timeline of Relevant Developments

Date	Event	Significance	Related links
May 2013	Li Yuanchao meets with Diosdado Cabello in Caracas		“Li Yuanchao Meets with President Diosdado Cabello of Venezuelan National Assembly,” Embassy of the PRC in the Netherlands.
July 2013	Diosdado Cabello visits China as president of PSUV	Strong signal of a deteriorating relationship. Cabello is summoned to China for official closed-door meetings about the Sino-Venezuelan joint funds and the lack of results.	“Vice President Li Yuanchao Meets with Guests from Venezuela,” PRC Commissioner’s Office in Hong Kong.
2015	National Assembly won by the opposition; new NA leadership invited to China	Julio Borges, president of the NA, holds talks with Chinese leadership about the current state of relations and moving forward with an opposition-controlled NA. China takes the initiative.
2016	Continued closing of PRC company operations in Venezuela	Further signals of a deteriorating relationship. Official position on not extending new loans. Closing and reduction in the operations of PRC companies in Venezuela.
Dec. 2017	Subsidiary of state-owned Sinopec files case against PDVSA over unpaid debt	A public demonstration of tensions between both sides.	“Lawsuit shows China losing patience with Venezuela” Financial Times.
Sept. 2018	President of China National Petroleum Corporation Zhang Jianhua visits Venezuela	The visit signals a normalization of the bilateral relationship.	“China y Venezuela impulsarán acuerdos de cooperación: presidente de CNPC,” Reuters
Jan. 2019	Official declaration of interim government	The interim government seeks to establish a communication channel with Beijing. Initiative from the Venezuelan side; Chinese leadership wary of attempts.
Feb. 2019	Juan Guaidó expresses willingness to converse with Beijing		“Stuart Lau, “Transcript: Juan Guaido on Venezuela’s ties with China,” South China Morning Post

2013-2018: China-Venezuela Relations Deteriorate

In 2014, during Xi Jinping’s first official visit to Venezuela as head of state, the Sino-Venezuelan relationship was upgraded to “Comprehensive Strategic Partnership,” the second-highest category China assigns to its bilateral relations.²⁹ Nonetheless, Sino-Venezuelan relations began showing cracks as soon as Hugo Chávez passed away in early 2013.

In July 2013, Diosdado Cabello, at the time vice president of the ruling United Socialist Party of Venezuela (Partido Socialista Unido de Venezuela, PSUV) and president of the National Assembly, went to China on a five-day tour. According to a former high-level official of Chávez’s inner circle, Cabello’s visit was formally solicited by the Chinese leadership to talk about the lack of results and irregularities surrounding the multimillion-dollar Sino-Venezuelan joint funds.³⁰ Two years prior, Zhang Ping, chairman of the Chinese chapter of the Chinese-Venezuelan High-Level Joint Commission, had expressed concerns to then-Venezuelan Ambassador to China Rosio Maneiro about the lack of coordination and precise information concerning the destination of funds.³¹ With Chávez out of the picture, given his oversized role in deepening Sino-Venezuelan relations, Cabello’s summoning to Beijing can be interpreted as a sign of great concern by the Chinese leadership about the misuse of Chinese funds and Sino-Venezuelan relations overall.

By the same token, in what can be read as the Venezuelan government’s reaction to Beijing’s grievances, while Cabello was holding meetings in Beijing, President Maduro denounced on national television the embezzlement of $84 million from the Sino-Venezuelan joint funds. The scandal was framed as part of an anti-corruption campaign of the Venezuelan government.³²

Another clear sign of concern came in 2016 shortly after legislative elections were held in Venezuela. At the time, many Chinese companies were moving employees to neighboring countries like Colombia and Panama for their personal safety and because many Chinese-led projects had ground to a halt.³³ For the first time in 16 years, the country’s opposition fared well in the elections and gained a majority in the legislature, effectively giving it oversight over national budgets, including the Sino-Venezuelan joint funds. In June that same year, Julio Borges, the coordinator of the opposition faction and deputy to the National Assembly, together with a group of other lawmakers, was invited to China by the Chinese Association for International Understanding (CAFIU), a front organization for the International Liaison Department of the Chinese Communist Party. Contrary to the characteristic boastful official coverage of high-level bilateral engagements, the visit was not mentioned by China’s Ministry of Foreign Affairs nor by state media: this was something unheard of in the context of China-Venezuela ties. Coordinating the invitation through CAFIU was an attempt by Chinese authorities to downplay the relevance of the invitation and limit official coverage in China.

According to a high-ranking Venezuelan official who took part in the talks, while the meetings were fruitful and carried out in a cordial manner, the real reason behind the invitation was to allow Chinese officials to gauge the new Venezuelan leadership at the legislature, as well as make sure that Chinese dealings with Venezuela were not being reconsidered and debt compromises honored. In an interview, the official expressed the following:

[The invitation came] through an NGO, so it was not a government visit, but the whole treatment was very high level… it was almost like a head of state, honestly it was very impressive… They did not want the government of Maduro to know that [we] were there, but the information leaked and that caused a serious problem, the Chinese were all worried. [The meetings were with] oil companies, the Foreign Ministry, the party… The objective of the visit was very clear: they wanted to build trust… What they also wanted was, in the face of a political change in Venezuela, to try to have a good relationship with the opposition and, an issue that seems important… in the meetings, they did not speak well of Maduro, they insistently referred to the poor execution of the projects, the problem of corruption, the problems Maduro’s regime had caused… a process in which the name and brand of China had been stained by the lack of execution and corruption…. Venezuela, China, and corruption were the same thing, and that bothered them deeply… There was [also] a veiled message… that in countries where there had been political changes, [where the new leadership] tried to disassociate from China, they had taken some kind of retaliatory measures. In other words, the message was: if there is a political change in Venezuela, we want to continue being players, and if you take us out, you are going to feel it.³⁴

The official’s comments lay bare Beijing’s profound preoccupation with how low Sino-Venezuelan relations had sunk, and they had good reason to be worried. On the one hand, a large percentage of the projects funded by the Sino-Venezuelan joint funds were either marred by irregularities and corruption or never completed.³⁵ On the other hand, the country’s economic and political crises were rapidly intensifying, with Venezuelans leaving the country in droves.³⁶ The economic and security situation across society worsened, exacerbated by progressive sanctions imposed by the U.S. against the Maduro administration.³⁷ Given China’s large financial footprint in the country, plus Venezuela being a key proponent of the Belt and Road Initiative in Latin America, the PRC ran the risk of being associated with the economic collapse of the country. Furthermore, oil production, Venezuela’s only means of fulfilling its debt commitments to China, had collapsed to historical lows.³⁸

Voices from within the Chinese business community underscore the economic concerns that raised the pressure on diplomats and policymakers in China: some went as far as charging that:

“China ignores the lender’s investment environment and potential loan repayment risks when it lends and invests large amounts in Venezuela, [. . .] an unsafe environment. [. . .] The ‘loans-for-oil’ cooperation model and investment projects in Venezuela seem to have fallen into a quagmire.”³⁹

Alongside such concerns and criticism, political preferences played no role. Chinese executives who had been moved from Venezuela to corporate offices in Peru and Colombia were unanimous in the belief that “both the current ruling party in Venezuela and the opposition party that may come to power will weigh the capabilities of China, the world’s second-largest economy, and will not easily offend China, the largest investor country unless it is absolutely necessary.”⁴⁰

The Challenge of the Interim Government of Venezuela

On January 23, 2019, Juan Guaidó, then president of the National Assembly of Venezuela, was instituted as the country’s interim president.⁴¹ At the time, a lot of international commentaries described Guaidó as a “self-declared” or “self-proclaimed” president.⁴² Nonetheless, there was a sound constitutional basis for his appointment,⁴³ the reason why most Latin American countries recognized him as the de jure head of state of Venezuela. Cuba, Nicaragua, and Bolivia criticized the move and remained supporters of Nicolás Maduro, while Mexico and some Caribbean states opted for neutrality. Internationally, the United States was Guaidó’s main supporter, and Russia his main detractor.⁴⁴

Beijing’s first reaction to the interim presidency came on January 25 with a pronouncement from Foreign Ministry Spokeswoman Hua Chunying: “Venezuelan affairs must and can only be chosen and decided by the Venezuelan people themselves, and China opposes external intervention in Venezuelan affairs.”⁴⁵ During the press conference, there was no explicit support for Maduro, and a call for negotiations was made to “all the parties involved.” One day later, on January 26, at an UN Security Council emergency meeting requested by the United States, China’s representative, Ma Zhaoxu, struck the same tone by calling on “all parties to stay rational and keep calm while bearing in mind the fundamental interests of Venezuela’s people.”⁴⁶

Beijing’s prudent approach in front of the cameras was also seen behind closed doors. According to an anonymous source who at the time was in contact with the PRC embassy in Caracas, right after Guaidó burst onto the scene, many Chinese state-owned enterprises operating in Venezuela temporarily paused or reduced their activities to a minimum.⁴⁷ This would not have been possible without a direct order from Beijing, a clear indication that Chinese authorities wanted to tread lightly and carefully assess the situation. Meanwhile, the PRC embassy in Caracas scrambled to figure out how to deal with the situation, seeking council from Beijing day and night.⁴⁸

Beijing was well aware that instability in Venezuela had regional repercussions, as they received open calls from across South America about the need for a peaceful political transition in Venezuela. In July 2019, during a meeting in Santiago de Chile between President Sebastian Piñera and Foreign Minister Wang Yi, Piñera expressed his concern about the regional impact of the Venezuelan crisis and requested China’s collaboration in searching for a solution.⁴⁹ The same message was transmitted by President Ivan Duque of Colombia to Xi Jinping during a state visit to Beijing that same month.⁵⁰

Such messaging did not fall on deaf ears: by June of 2019, Xi Jinping voiced a willingness to play a “constructive role” in addressing Venezuela’s crisis.⁵¹ In a manifestation of its sense of alarm, Beijing sought to conduct some inquiries of its own. In the months that followed the installment of the interim government, a high-level Chinese delegation was sent to South America with the sole purpose of gathering regional perspectives on the Venezuelan power struggle. Parsifal D’Sola (one of the co-authors of this chapter), Chinese foreign policy advisor to the interim government at the time, learned of the tour from the Chilean counterparts who met with the Chinese delegation in Santiago in August 2019.⁵² In talks with D’Sola, the Chilean representatives emphasized that the Chinese delegation undoubtedly took note of all their arguments related to the negative consequences of Maduro’s economic policies and their impact in the region. The Chinese were very much aware of, and preoccupied with, the mass migration coming out of Venezuela, stressing that any kind of foreign military intervention (an implicit reference to the United States) would only increase such outflows and have catastrophic consequences for the region.

It is worth pointing out that, while the Chinese delegation conveyed China’s willingness to support a dialogue for a peaceful resolution in Venezuela when asked about a potential Chinese coordination with the European Union or support for the mediation efforts taking place in Norway, they dodged the question. Overall, the Chinese delegation stuck to their principle of nonintervention: “This is a problem to be solved by Venezuelans,” “any type of mediation should include both parties” (referring to Maduro and Guaidó), “we vehemently oppose foreign military intervention,” and “external efforts can only be auxiliary.” The Chinese delegation also met with government officials in Brazil and Argentina to exchange views on Venezuela.

Meanwhile, the interim government was making efforts to convey its message across Beijing. In articles published in Bloomberg⁵³ and the South China Morning Post,⁵⁴ Juan Guaidó argued “why China should switch sides in Venezuela,” emphasizing how Nicolás Maduro had squandered the funds and trust China had placed in his administration, and that China could not only help facilitate a political transition, but also contribute to rebuilding the country. Similar pronouncements were made by Julio Borges, Guaidó’s Minister for Foreign Relations at the time.⁵⁵

Likewise, in August 2019, a China work group was created to establish a back-door channel with Beijing.⁵⁶ Initial attempts all relied on the Latin American governments that recognized Guaidó. While there was a concerted effort to triangulate messages through foreign ministries, multilateral organizations, and embassies, most of them were blocked or ignored by the PRC counterparts based in Latin America. A good example took place in the run-up to the BRICS (Brazil, Russia, India, China, and South Africa) Summit held in Brasilia in November 2019, when attempts were made through Brazilian diplomats to use the summit as cover for a high-level closed-door meeting, but were all bluntly rejected. Eventually, an indirect unofficial channel was established through a business figure close to members of the Politburo Standing Committee of the CCP, but this was of short duration.

In the interim, both sides exchanged points of view on the evolving political struggle in Caracas. On the Venezuelan side, the message focused on offering guarantees that Chinese debt would be honored and appeasing Chinese concerns about military intervention in the country, stressing that neither the interim government nor any of the regional governments that recognized Guaidó would support or go along with a U.S.-led military intervention in the country. On the Chinese side, the message aligned with their public pronouncements on the issue, expressing concerns about Chinese assets in Venezuela, the destabilizing effects of the Venezuelan crisis at a regional level, and the need to arrive at a negotiated solution between all the parties involved.

The indirect channel between the interim government’s China work group and PRC counterparts only lasted three months. In D’Sola’s view, the channel eventually went cold because the Chinese leadership no longer considered Maduro’s authority to be in jeopardy; hence there was no added value in continuing conversations with a political faction that did not hold any real power. For all the interim government’s diplomatic efforts, both public and private, even at the peak of its international recognition, it was ultimately unsuccessful at establishing a formal communication channel, much less gaining any sort of international recognition from Beijing. As D’Sola states, no in-person meetings or direct communication ever occurred between the Chinese leadership and representatives from the interim government. Overall, this underscores the PRC’s unwavering recognition of Maduro’s government.

Lessons from China’s Response to the Challenges Faced in Venezuela

Matt Ferchen, a long-time expert on the China-Venezuela relationship, has pointed out repeatedly that the most concerning problem was “Beijing’s refusal to acknowledge the role its loans and diplomatic support have played” in the slow-motion trainwreck that is the Venezuelan economy, and warned in 2019 that the experience holds “valuable lessons that its decision-makers, and its international partners, would be unwise to ignore.”⁵⁷ Venezuela did not collapse overnight. Signs of institutional erosion and financial malfeasance were there from the moment the PRC decided to get invested in Venezuela in the late 2000s, and they only intensified over the following decade. On the one hand, this speaks to China’s predilection for state-to-state relations and a disregard for domestic politics and the rule of law in countries where it has a vested interest. On the other hand, under both Chávez and Maduro, Venezuela has actively supported and facilitated greater regional engagement with China for over two decades. Risking billions of dollars in loans on a petrostate, no matter how corrupt and inefficient it is, has in part paid off given what China has received in the way of economic expansion and political support for its initiatives in Latin America, the Belt and Road Initiative included. Moreover, Venezuela is on its way to paying off the loans, albeit with years of delay and no meaningful projects completed. Overall, the insights offered in this chapter suggest that the Beijing leadership has been learning on the job and (belatedly) sought information and discreetly solicited advice that would allow it to independently evaluate the situation and protect its interests.

A second lesson is that Beijing is politically agnostic. A BBC commentary in February 2019, shortly after Juan Guaidó’s declaration, discerns that the Chinese government had misjudged the situation in Venezuela, but considered that “even if the opposition succeeds in seizing power, the two countries will quickly establish a cooperative relationship because it is beneficial to both parties.”⁵⁸ China’s reaction both in 2015 and 2019—two instances when it envisioned potential leadership changes in Venezuela that could affect its interests—sought to engage, rather than shun, the opposition. This should not be read as China siding with, or having a preference for, a new government in Venezuela. After all, the PRC remained openly critical of U.S. positions toward the Maduro government and also helped his administration bypass economic sanctions,⁵⁹ not to mention it had significant reasons to distrust Guaidó given his close relationship with the Trump administration.⁶⁰ Nonetheless, the PRC’s handling of both issues points to a clear non-ideological intent: securing its economic interests in Venezuela and avoiding reputational costs in Latin America. In other words, had a political transition taken place in Venezuela, odds are China would have been flexible and adapted to a new government in Caracas.

Finally, it appears that in the case of Venezuela, neither the chronic social and economic crisis nor the acute political impasse moved the Chinese leadership to insert itself as a mediator or facilitator of dialogue. When compared to the PRC’s known efforts at mediation in Africa, the Middle East, and Southeast Asia, two factors differentiate the Venezuelan case: (1) it is a country within the United States’ sphere of influence, and (2) the United States played an oversized role in pushing for regime change in 2019. Both factors probably influenced China’s calculations and whether it should get involved, especially at a moment when its own relationship with the U.S. was fraught with tension. While China publicly pushed for de-escalation between the contending parties, it never offered or actively supported any viable solutions. To the extent that “learning about Latin America” was an important goal, the lesson has been a mixed blessing, to put it mildly. While China occasionally admonished or warned individual stakeholders and sporadically withheld loan commitments, it recognized only the country’s de facto administration. There was a reluctant acquiescence to talk to both parties, but no public acknowledgment of any such talks, and public pressure from foreign governments went unheeded.

The Stimson Center’s ongoing project on China aims to explore China’s strategic intentions and foreign policy behavior “to reduce the likelihood of misunderstanding, misperception, and miscalculation.” Western perceptions of China’s interests are frequently based on misunderstandings and misguided by self-serving assumptions that often fail to accurately reflect local realities. Such misperceptions are particularly detrimental to any potential joint efforts at mediating: time and again, Chinese leaders can be seen to respond allergically to any accusations of complicity in foreign crises and are reluctant to respond to public calls for support, let alone to take sides, in conflict situations. The evidence in the Venezuelan case shows that China’s goals tend to be far more pragmatic than Western analysts like to assume, neither “nefarious” nor directly aimed at threatening the interests of third parties.

Given the current international climate of heightened suspicion and hostility, there is little hope that China can be moved from the outside to become invested in negotiating conflict resolutions in the global arena.

Benjamin Creutzfeldt, PhD, is affiliated with Leipzig University.

Parsifal D’Sola Alvarado is the Executive Director of the Andres Bello Foundation – China Latin American Research Center.

Notes

1
According to the United Nations Refugee Agency, an estimated 7.1 million Venezuelans have left their country, the vast majority between 2015 and 2019. UNHCR, the UN Refugee Agency / USA, Emergencies, Venezuela Situation, www.unhcr.org/venezuela-emergency.html, accessed December 17, 2022.
2
Francisco Monaldi has spelled out a possible shift for China on Venezuela: “China Can Help Save Venezuela. Here’s How,” Americas Quarterly, April 15, 2019, www.americasquarterly.org/article/china-can-help-save-venezuela-heres-how/. This came after first reports in February of secret encounters between Chinese and Venezuelan representatives: Kejal Vyas, “China dialoga con la oposición de Venezuela para proteger inversiones,” February 18, 2019, www.economiaynegocios.cl/noticias/noticias.asp?id=547463.
3
Probably the most vivid example of Chávez’s antagonistic and provocative stance toward the United States is his 2006 address to the UN: Statement by H. E. Hugo Chaves Frias, President of the Bolivarian Republic of Venezuela, at the 61st United Nations General Assembly, New York, September 20, 2006, www.un.org/webcast/ga/61/pdfs/venezuela-e.pdf.
4
Ministry of Foreign Affairs of the People’s Republic of China, “中国同委内瑞拉的关系”
[China’s Relations with Venezuela], www.fmprc.gov.cn/web/gjhdq_676201/gj_676203/nmz_680924/1206_681168/sbgx_681172/, accessed October 30, 2022.
5
Ministry of Foreign Affairs, “China’s Relations with Venezuela.”
6
Venezuela holds the largest natural oil reserves of any sovereign nation, constituting almost 20% of the world’s total reserves. It was one of the five founding members of OPEC in 1960 and was for decades the largest producer of OPEC member states, slightly ahead of Saudi Arabia. China, however, imports only a fraction of its oil from Venezuela: 4% in 2014 (Statista: “Breakdown of China’s crude oil imports in 2014,” www.statista.com/statistics/221765/chenese-oil-imports-by-country/, accessed November 15, 2022), slipping to less than 2% in 2020 (Statista: “Main suppliers of crude oil to China in 2020 and 2021,” www.statista.com/statistics/1310953/oil-imports-by-country-china/, accessed November 15, 2022).
7
Crude oil prices rose almost continuously over a ten-year period from 1998 to 2008 and remained high until 2014; cf. Macrotrends, “Crude Oil Prices – 70 Year Historical Chart,” www.macrotrends.net/1369/crude-oil-price-history-chart, accessed December 15, 2022.
8
Carmen M. Reinhart and Miguel Angel Santos, “From Financial Repression to External Distress: The Case of Venezuela, Emerging Markets Finance and Trade,” July 2015, Working Paper 21333, National Bureau of Economic Research, www.nber.org/papers/w21333.
9
Kevin P. Gallagher and Margaret Myers, China-Latin America Finance Database, Inter-American Dialogue, Washington, DC, 2022.
10
In 2006, Hugo Chávez went as far as to offer discounted oil to poor neighborhoods in New York, (an offer variously interpreted as an act of generosity, a propaganda tool, a spiteful response to criticism from U.S. president George W. Bush, and a strategy to undermine U.S. oil companies. Rebekah Kebede, “Venezuela Brings Free Heating Oil to Poor in NY,” Reuters, December 14, 2007, www.reuters.com/article/citgo-energy-bronx-assistance-idUSN1425588920071214).
11
Javier Corrales, “Using Social Power to Balance Soft Power: Venezuela’s Foreign Policy,” Washington Quarterly 32, no. 4 (2009): 97-114.
12
By committing ever-larger sums to social programs (https://rebelion.org/se-incrementa-financiamiento-de-pdvsa-a-programas-sociales/), the Chávez administration won widespread support among the lower and middle classes: ‘Subcomandante Marcos,’ “Se incrementa financiamiento de PDVSA a programas sociales,” La Jornada, May 26, 2006. However, the effectiveness of this type of social change has been debated, for instance by Luis Pedro España, Más allá de la renta petrolera y su distribución: una política social alternativa para Venezuela, Instituto Latinoamericano de Investigaciones Sociales, June 10, 2006, https://library.fes.de/pdf-files/bueros/caracas/08804.pdf.
13
Ministry of Foreign Affairs of the People’s Republic of China, “论坛简介” [Brief Introduction to the Forum], March 1, 2018: www.chinacelacforum.org/ltjj/201803/t20180301_6284968.htm.
14
Benjamin Creutzfeldt and Victor M. Mijares, “Cautious Engagement: Continuity and Change in the Relations between Xi Jinping’s China and Nicolás Maduro’s Venezuela,” in China and Latin America in the 21st Century, ed. Nele Noesselt (Marburg: Tectum, 2020), 107-132.
15
Conversations with various scholars at the Chinese Academy of Social Sciences Institute of Latin American Studies in Beijing, conducted by Benjamin Creutzfeldt in person and online between 2018 and 2022.
16
See, for instance, one of the many events in which Hugo Chávez displayed his signature showmanship in making repeated references to “socialist China, solidarious China” and “the socialist path to a better life,” but found no echo in the response of the Chinese executives: “Intervención del Comandante Presidente Hugo Chávez durante reunión con delegación de la República Popular China,” Todo Chávez en la Web, March 14, 2011, http://todochavez.gob.ve/todochavez/340-intervencion-del-comandante-presidente-hugo-chavez-durante-reunion-con-delegacion-de-la-republica-popular-china.
17
“Firma de acuerdos entre la Republica Popular China y la República Bolivariana de Venezuela,” Todo Chávez en la Web, June 11, 2007, http://todochavez.gob.ve/todochavez/2185-firma-de-acuerdos-entre-la-republica-popular-china-y-la-republica-bolivariana-de-venezuela.
18
Gustavo Ocando Alex, “Venezuela, la puerta giratoria de los negocios chinos en América Latina (1),” La Fundación Andrés Bello – Centro de Investigación Chino, November 3, 2020, https://fundacionandresbello.org/reportajes/venezuela-la-puerta-giratoria-de-los-negocios-chinos-en-america-latina-i/.
19
Xie Shihong and Zheng Shujiu, “中国投资在委内瑞拉停摆：以石油换贷款，真的双赢吗？” [Chinese investment in Venezuela shut down: Is loans for oil really win-win?], 澎湃新闻 [The Paper], January 12, 2017.
20
Monitor de la OFDI de China en América Latina y el Caribe, Red Académica de América Latina y el Caribe sobre China, 2022, www.redalc-china.org/monitor/informacion-por-pais/busqueda-por-pais/37-venezuela.
21
Ministry of Foreign Affairs of the PRC, “Hu Jintao Holds Talks with Chavez,” September 24, 2008, www.fmprc.gov.cn/mfa_eng/gjhdq_665435/3447_665449/3538_665158/3540_665162/200809/t20080926_596753.html.
22
Niu Changzhen, “战略互信与中美关系” [Strategic mutual trust and China-US relations], 挑战与机遇:政治学与国际关系学术共同体2010 年会论文集[Challenges and opportunities: Proceedings of the 2010 Annual Meeting of the Academic Community of Political Science and International Relations] 2010, 483.
23
Aníbal Pedrique, “La oficina más cara del mundo no lo parece,” Centro Latinoamericano de Investigación Periodística, February 23, 2021, www.elclip.org/la-oficina-publica-mas-cara-del-mundo-no-lo-parece/.
24
Matt Ferchen, “China-Venezuela Relations in the Twenty-First Century: From Overconfidence to Uncertainty,” Special Report, United States Institute of Peace, September 29, 2020, 10.
25
Xie and Zheng, Chinese investment in Venezuela shut down; Ifeng News, “中国在委内瑞拉投资打了水漂？大使说出真相” [Are Chinese investments in Venezuela a waste? Ambassador
talks facts], interview, September 15, 2019,
https://news.ifeng.com/c/7pvwHef0HKK.
26
Stephen B. Kaplan, “Banking Unconditionally: The Political Economy of Chinese Finance in Latin America,” Review of International Political Economy 23, no. 4 (2016): 643-76.
27
Stephen B. Kaplan and Michael Penfold, 2019, “China-Venezuela Economic Relations: Hedging Venezuelan Bets with Chinese Characteristics,” 21st Century Diplomacy, www.wilsoncenter.org/microsite/5/node/82186.
28
Matt Ferchen, “China-Venezuela Relations: A Perfect Storm,” Carnegie Endowment for International Peace, September 24, 2018.
29
Cf. Feng Zhongping and Huang Jing, “China’s Strategic Partnership Diplomacy: Engaging with a Changing World,” European Strategic Partnerships Observatory, Madrid, 2014.
30
Interview with an anonymous Venezuelan high-level official conducted by Parsifal D’Sola on February 26, 2022.
31
Isabel Guerrero, “Las ‘damas chinas’ que desaparecieron del tablero,” Centro Latinoamericano de Investigación Periodística, April 3, 2021, www.elclip.org/las-damas-chinas-que-desaparecieron-del-tablero/.
32
“Nicolás Maduro anuncia detención de cinco personas por corrupción en fondo con China,” El Espectador, July 8, 2013, www.elespectador.com/mundo/america/nicolas-maduro-anuncia-detencion-de-cinco-personas-por-corrupcion-en-fondo-con-china-article-432369/.
33
Kejal Vyas, “China Rethinks Its Alliance With Reeling Venezuela,” Wall Street Journal, updated September 11, 2016, www.wsj.com/articles/china-rethinks-its-alliance-with-reeling-venezuela-1473628506?mod=e2tw.
34
Interview with an anonymous Venezuelan high-ranking official conducted by Parsifal D’Sola on October 1, 2022.
35
“Negocios Chinos: Acuerdos que socavaron la democracia en Venezuala,” Transparencia Venezuela, August 2020, https://transparenciave.org/project/informe-negocios-chinos/.
36
Ángel Bermúdez, “Cómo impacta la crisis migratoria venezolana en la economía de otros países de América Latina,” BBC News Mundo, July 29, 2019, www.bbc.com/mundo/noticias-america-latina-49119834.
37
Studies on the effect of U.S. sanctions against Venezuela since 2014 include Mark Weisbrot and Jeffrey Sachs, “Economic Sanctions as Collective Punishment: The Case of Venezuela,” Center for Economic and Policy Research, April 25, 2019, https://cepr.net/report/economic-sanctions-as-collective-punishment-the-case-of-venezuela/; Ippei Kato, “Venezuela: The Impact of US Sanctions,” United Nations Association of Australia, October 1, 2021, www.unaa.org.au/2021/10/01/us-sanctions-in-venezuela/.
38
Rafael Ramírez, “El colapso de la industria petrolera venezolana,” Política Exterior, November 19, 2021, www.politicaexterior.com/el-colapso-de-la-industria-petrolera-venezolana/.
39
Xie and Zheng, Chinese investment in Venezuela shut down, 3.
40
Interviews with management-level employees in the Chinese oil service industry, were conducted by Benjamin Creutzfeldt in Bogota in May 2016 and in Lima in April 2017.
41
Bárbara Horzella, “Venezuela: Proclamación de Juan Guaidó como Presidente encargado,” Biblioteca del Congreso Nacional de Chile, May 2019.
42
“Juan Guaidó se autoproclama ‘presidente encargado’: qué países reconocen al presidente de la AN y cuáles se mantienen con Nicolás Maduro,” BBC News Mundo, January 24, 2019, www.bbc.com/mundo/noticias-internacional-46982431.
43
“Juan Guaidó se autoproclama ‘presidente encargado.’ ”
44
“Qué países han reconocido a Juan Guaidó y cuáles no como presidente interino de Venezuela,” El Mundo Madrid, January 24, 2019, www.elmundo.es/internacional/2019/01/24/5c496cfdfc6c83b3358b469b.html.
45
“中国外交部：委内瑞拉事务必须也只能由委人民自己选择决定” [Chinese Ministry of ForeignA ffairs: Venezuelan affairs must and can only be decided by the Venezuelan people themselves], Xinmin Evening News, January 26, 2019, https://baijiahao.baidu.com/s?id=1623687115009383853&wfr=spider&for=pc.
46
United Nations, Meetings Coverage and Press Releases, “With Venezuela Buckling under Severe Shortages, Security Council Emergency Session Calls for Political Solution to End Crisis, as Divisions Emerge over Path Forward,” January 26, 2019, https://press.un.org/en/2019/sc13680.doc.htm.
47
Interview with anonymous source close to the PRC Embassy in Caracas conducted by Parsifal D’Sola on June 23, 2019.
48
Stuart Lau, “Caught in the Middle of Venezuela’s Power Struggle, a Worried China Weighs Its Options,” South China Morning Post, February 23, 2019, www.scmp.com/news/china/diplomacy/article/2187031/caught-middle-venezuelas-power-struggle-worried-china-weighs.
49
“Presidente Piñera pide colaboración a China para buscar solución en Venezuela,” La Tercera, July 27, 2019, www.latercera.com/politica/noticia/pinera-pide-colaboracion-a-china-venezuela/756991/.
50
“Colombia y China firmaron convenios y rechazaron intervención militar en Venezuela,” La República, July 31, 2019, www.larepublica.co/economia/xi-jinping-e-ivan-duque-firmaron-15-convenios-binacionales-en-visita-de-estado-2891383.
51
“Xi Says China Will Play ‘Constructive Role’ on Venezuela,” Reuters, June 4, 2019, www.reuters.com/article/us-venezuela-politics-china/xi-says-china-will-play-constructive-role-on-venezuela-idUSKCN1T606W.
52
In-person meeting between Parsifal D’Sola and Chilean high-level diplomat, October 2019.
53
Juan Guaidó, “Why China Should Switch Sides in Venezuela,” Bloomberg, April 14, 2019, www.bloomberg.com/opinion/articles/2019-04-14/why-china-should-shift-support-to-guaido-in-venezuela?leadSource=uverify%20wall.
54
Stuart Lau, “Transcript: Juan Guaido on Venezuela’s Ties with China,” South China Morning Post, February 2, 2019, www.scmp.com/news/china/diplomacy/article/2184804/transcript-juan-guaido-venezuelas-ties-china.
55
“Borges advierte a China que la dictadura de Maduro no cumplirá sus compromisos de deuda,” República Bolivariana de Venezuela Asamblea Nacional, Centro de Comunicación Nationale, October 5, 2019, https://presidenciave.com/presidencia/borges-advierte-a-china-que-la-dictadura-de-maduro-no-cumplira-sus-compromisos-de-deuda/.
56
Parsifal D’Sola was an advisor to and member of the group.
57
Matt Ferchen, “Venezuela and China: A Perfect Storm,” The Diplomat, February 6, 2019, www.opendemocracy.net/en/democraciaabierta/venezuela-and-china-perfect-storm/.
58
“委内瑞拉乱局：欧美全面承认瓜伊多最大债主中国的误判受考验” [Chaos in Venezuela: Europe and the United States fully
recognize Guaidó; Misjudgment by China the largest creditor is tested], BBC Chinese, February 4, 2019: www.bbc.com/zhongwen/simp/world-47125302.
59
Lucia Kassai, “Doctored and Rebranded Oil Blacklisted by U.S. Winds Up in China,” Bloomberg, January 21, 2021, www.bloomberg.com/news/articles/2021-01-22/china-imports-oil-doctored-to-skirt-u-s-sanctions-on-venezuela?leadSource=uverify%20wall.
60
“Venezuela’s Juan Guaidó Cheered at US Congress Speech,” BBC News, February 5, 2020, www.bbc.com/news/av/51384726.

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